The importance of legalese

(posted by John)

One thing most people like even less than lawyers is the legalese that they have made so ubiquitous in our lives. By legalese, I mean the legal speak that we see in things like insurance policies and licensing agreements. It’s something we deal with all the time—we see it in our cell phone bills, our apartment leases, every time we update iTunes.  Of course, if you’re like most people (see the pie chart), you’ve never actually read (or agreed to?) the terms of your agreement with Apple. We don’t read these enormously long, technical, and boring documents at least in part because even if we knew what they said, we couldn’t do anything about it. We have no individual power to bargain with Apple, so we can take their terms or leave them. It’s not worth Apple’s time to bargain with any one customer, because it would be more expensive to deploy legal teams to ‘dicker’ over terms with individual customers than it would be to simply let go those customers that don’t like the terms. 

These types of agreements are called ‘contracts of adhesion.’ They were considered a brilliant development when they came about in the business world because they helped drastically limit the legal costs of firms. Companies that developed standardized forms to deal with their customers en masse gained a huge advantage over those that had to create unique documents for each transaction. Today they’re a hallmark of the corporate world, but most of us just find them impersonal and generally annoying . . . or at least I do.

That doesn’t answer the question, though, of whether we should we be reading the terms of agreement. For things like Facebook or iTunes, I tend to go on the assumption that someone out there has read the terms and made sure they don’t contain anything too bad. This, my contracts professor assures me, is a stupid thing to assume, though even after several months in his class, I personally am no closer to understanding the terms I’m agreeing to. But I guess my professor must be on to something—as South Park, in its wisdom, shows us, you should be careful about signing on the dotted line (or clicking I Agree), else you might end up agreeing to participate in human experiments run by Apple. (This clip basically sums up the post, if you’re short on time…)

But even for all of its annoyingness, legalese is important. One of the major topics in contract law deals with the question of how we know when a binding agreement has actually been made. If, for example, you said to your friend, “I’d give you a million bucks for the rest of that hot dog,” it seems pretty clear you’re not making a serious agreement. But it’s not always that obvious. We read a case earlier this year in which two guys at a bar (one probably drunk, the other probably pretending to be) wrote an agreement on a napkin for the sale of a farm. When the drunk guy eventually sobered up, he tried to say one of two things: either, (1), the whole discussion had been in jest, that they had been laughing and joking about him selling the farm, because the other guy knew he’d never actually want to sell it; or, (2), he was drunk and not of sound mind at the time, so there was no enforceable agreement. But the courts enforced the napkin contract, and the guy had to sell his property.

The question of when we’re making a serious agreement, of when we wish to bind ourselves, is not an easy one. One of the most effective ways we have dealt with it is by developing the lexicon of legalese that, today, is often embodied by what we see in those annoying standardized forms. This legalese helps us in a couple of ways in particular.  First, when we use it, it shows we actually intend to be bound. When you know certain words have the power to bind you, then you won’t use them unless you’re serious. Second, when we notice a person we’re talking to is using legalese, it puts us on notice that that person is being serious. Even if you know nothing about the law of contracts, when someone mentions getting a lawyer involved, writing down “terms,” or actually signing a piece of paper, you quickly realize they aren’t kidding around and that you shouldn’t keep going unless you aren’t either.

That’s why the courts ended up enforcing the napkin contract—even though it was written on a napkin, it was still written, and it contained all of the hallmarks of a serious agreement. The guy should have recognized that fact and known not to sign the napkin unless he was serious too.[1] It’s also how Kyle ended up in trouble with Apple after not reading his license agreement (see the South Park link above). That’s the importance of legalese; when we use it, we know it has special power to bind us to our word. To put it differently, once your friend writes your offer for his hotdog on the wrapper, you shouldn’t sign it unless that hotdog is looking, literally, like a million bucks.

[1] The court also said that he wouldn’t have been able to draw up such a detailed contract with all of the necessary bits and pieces that would normally make it binding if he had been drunk, so the contract couldn’t be eliminated on those grounds either…